Buyer
Representation EXPLORING THE BENEFITS OF
Dear Friends,
As you may have heard in the media, the National Association of Realtors (NAR) has entered into a nationwide settlement to resolve a class-action lawsuit. This has led to many changes in the industry, and we wanted to share some notes on these developments.
COMMISSION DECOUPLING
Commissions for each side (buying and selling) are now separate. Moving forward, Buyers and their Buyer-Brokers will establish a relationship and fee structure through a Buyer Broker Agreement, similar to how a Seller signs a Listing Agreement with their Listing-Broker before putting their home on the market.
BUYER REPRESENTATION & BROKER COMPENSATION AGREEMENT
Buyers are required to use the Buyer Representation and Broker Compensation Agreement when working with us and before viewing any properties. This agreement is essential to a fair and transparent transaction and outlines the following:
◊ The nature of our exclusive agreement
◊ Our fiduciary duty to you as a buyer’s agent
◊ Our fee
After this agreement is signed, the home search can begin! Once a Buyer identifies a property and is ready to write an offer, the Buyer
will have choices as to how they wish to approach the Buyer-Broker fee:
◊ Buyer can ask Seller to pay the full amount of the fee
◊ Buyer can ask Seller to pay part of the fee (Buyer will pay the rest)
◊ Buyer can pay the full fee
While some Sellers may choose to offer concessions to Buyers to assist in payment of the Buyer-Broker fee, others may not. It is important to understand that the Buyer is ultimately responsible for the agreed upon fee, should the seller choose not to contribute.
OPTIONS & CHOICES
We want to ensure you have the best agent for your particular needs, and we certainly hope that is us! We would be delighted to help you through your home buying journey, but please know that you are free to make the choice that best suits you – whether that’s working with us, with another agent, or even consulting with an attorney. Your peace of mind is most important to us!
We very much value you and we look forward to the possibility of working together!
All the Best,
Your Trusted Agents
Purchasing a home is often one of the most significant financial commitments you’ll undertake, with long-term implications. A reliable real estate consultant can serve as your seasoned navigator, skillfully negotiating on your behalf and efficiently managing the extensive array of documents, reports, and contracts, all while safeguarding you from potentially expensive errors.
LEVERAGING THE SOTHEBY’S INTERNATIONAL REALTY ® BRAND
Established in 1976, Sotheby’s International Realty ® has become the world’s premier luxury residential real estate brokerage. Through our vast global footprint, local expertise, and unequalled referral network, we ensure that the properties we represent receive the far-reaching and unparalleled exposure they deserve.
The Sotheby’s International Realty ® brand is built on the centurieslong prestige of the world’s preeminent auction house. Sotheby’s history and our unmatched reputation give our listings the best-inclass exposure they deserve and assures buyers they are working with a trusted partner.
NAVIGATING THE HOME BUYING PROCESS
Having an experienced professional in your corner offers a competitive advantage when searching for your perfect home and accessing local resources. When leveraged by savvy buyers, my years of experience in the community and the industry lead to proven results time after time.
1
The Home Buying Process
Meet A Professional & Engage In Buyer Agreements
Interview several agents to find the right fit & discuss your goals, needs, timeline and non-negotiables in your home search. Understand your options for Buyer Representation & determine who is the best fit to meet your needs as you navigate the rest of the process.
2 Get Pre-Approved
Knowing what you can afford is a critical piece of information that will enhance your home search. You will need pay stubs, W2s and bank statements to get pre-approved.
3 Search For Homes
This is the fun part! Your agent will match homes with your search criteria and do the legwork to schedule private showings or previews during public open houses.
4 Make An Offer
Your agent will walk you through the legal contract and prepare the necessary pieces to submit a strong offer on your behalf.
Contract & Negotiation
In most cases, the contract provides you with a timeline to obtain financing, as well as time to inspect the condition of the home. Your agent will inform you of all your rights and responsibilities related to the contract.
6
In Escrow
You and the seller have agreed to the price and contract terms. The home is effectively being held for you until closing!
7
Final Details
Order an inspection during your due diligence period. The appraisal will be ordered by your lending institution, and your lender will be in touch to confirm any details needed to finalize your loan.
8
Closing
You’ve done it! This is when the final transfer of funds and ownership will take place. A title company or an attorney typically acts as an independent third party to facilitate the closing.
Understanding Agency
We will provide you with the Disclosure Regarding Agency relationship document that will explain in detail the role of your Agent. It should be understood that legally, the Brokerage is the entity that represents the Buyer or Seller, and the Agent is a sub-agent of the Brokerage. In this document, we will refer to them as the Agent, and the brokerage as the Broker.
DUAL AGENCY
Brokerages can legally represent both a Buyer and Seller in the same transaction, or could represent multiple Buyers in the same sale, with the prior written consent of the Brokerages’ client(s). Less frequently, but also legal, an Agent can represent both sides of a transaction. The document titled “Possible Representation of More Than One Buyer or Seller – Disclosure and Consent” explains dual agency and its implications.
“Don’t wait to buy real estate. Buy real estate and wait.”
Our Initial Consultation
An initial meeting is important to understand your home buying needs and to develop a strategy to help you successfully make a purchase.
UNDERSTANDING YOUR REAL ESTATE GOALS
◊ Time Frame for Purchase
◊ Past Real Estate Experience
◊ Financial Status / Pre-Approvals
◊ Risk Tolerance / Investment Type
REFINING OUR SEARCH
◊ Location / Neighborhood
◊ Price Range
◊ Home Size / Bedrooms / Bathrooms / Square Footage
◊ Non-negotiables
◊ Condition / Desire to Make Improvements
◊ Commute / Walkability / School Districts
Benefits of Exclusive Representation
Your Agent will prepare a contract outlining their services so they can commit to assisting you with your home purchase transaction. As your exclusive representative, they will be assisting you with many tasks.
Below is just a brief overview of some of the areas where Agents demonstrate their value and contribute to a successful purchase.
◊ Provide an overview of the current market dynamics
◊ Develop a purchase strategy
◊ Assist with procuring financing if needed
◊ Evaluate purchase price range
◊ Set Up listing alerts
◊ Schedule property tours, both privately and of open houses
◊ Provide access to Off-Market, Coming Soon and Pocket Listings
◊ Review disclosures and reports on selected homes
◊ Evaluate and negotiate the offer
◊ Recommend vendors for inspections
“There’s always opportunity in real estate. It’s just a matter of finding that opportunity in the current market.”
Understanding Commissions
THE BACKGROUND
In California, it has been customary for the seller of residential property to pay any Buyer-Broker through property sale proceeds, and specifically from a portion of the listing brokerage’s compensation paid by the seller.
Although this has been typical, Sellers have never been required to pay the compensation of a Buyer-Broker, and commission has always been negotiable.
Following national disputes and settlements regarding this customary practice, commission has been decoupled, with Buyers and their BuyerBrokers establishing a relationship and fee structure through a Buyer Broker Agreement.
BROKERAGE COMMISSION
Similar to a Listing Agreement, Buyers can complete a contract for professional services and representation between themselves and their Agent. As of August 17, 2024, this document will be required to view properties. This document will also confirm compensation for the Buyer’s Agent and Brokerage. It should be noted that the amount a Brokerage charges is not fixed by law and is negotiable.
This is an important decision, and buyers have a choice. While we would absolutely love to work with you, we want you to know that the decision is 100% yours – you can choose to work without an agent, work with another agent who may offer a lower fee, or work with an attorney who may offer a limited scope of services.
COMPENSATION
The compensation paid for Buy Side representation is not exclusively paid to the Agent. It is shared with the Brokerage to cover business operations, expenses such as Errors and Omissions insurance, membership in industry organizations, and to offset the Agent’s necessary business expenses associated with licensed activities.
The Buyer Representation and Broker Compensation Agreement allows us as your Agent to represent you
and confirms a relationship of exclusivity. It covers the payment for all types of Buy Side transactions, allowing us to search for properties that are not on the MLS, including For Sale By Owner, Off Market, Coming Soon, or Pocket Listings.
MOVING FORWARD + THE BUYER BROKER AGREEMENT
It is now widely recognized both in California and nationally that a Buyer-Broker Agreement is essential to a fair and transparent transaction.
This agreement is “exclusive” because you are agreeing to work only with us as your Agents. It ensures that you are getting the best possible service when searching for and purchasing a home.
While some sellers may choose to offer a concession to Buyers, which may be applied to assisting in the payment of the buyer fee, others may not. The Exclusive Buyer Representation and Broker Compensation Agreement outlines your obligation to compensate your Agent directly for their services, if those services are not paid by the Seller.
We are always happy to discuss these practice updates and answer any questions you might have.
10 Benefits Of Having An Agent
1. DEEP KNOWLEDGE
Agents have in-depth knowledge about their local real estate markets, including neighborhoods, pricing trends, and what Buyers and Sellers are seeking.
2. NEGOTIATION SKILLS
Experienced Agents have honed their negotiation skills over many transactions. They help Sellers get the best prices for their properties and ensure Buyers don’t overpay when purchasing their homes.
3. NETWORK
Agents are part of a vast network of professionals, from home inspectors to mortgage brokers, which can be invaluable during the buying and selling process. Their relationships can help ensure transactions run smoothly, and can uncover opportunities you might not find on your own.
4. UNDERSTANDING OF FORMS
Purchasing or selling a home involves a lot of legal paperwork. An experienced Agent knows the ins and outs of these contracts and can help you understand them, making you feel comfortable during the process.
5. PROBLEM SOLVING
Every real estate transaction has its unique challenges. Experienced Agents have encountered and overcome many hurdles and can use those experiences to address issues that arise.
6. TIME SAVING
Agents do a lot of behind-the-scenes work at every stage of the real estate transaction. From researching properties to coordinating with other Agents and handling paperwork, their expertise streamlines the process and saves you time.
7. EMOTIONAL BUFFER
Buying or selling a home can be emotional. An Agent serves as a buffer, ensuring that judgments don’t get clouded.
8. FUTURE GUIDANCE
The relationships that many clients form with their Agents often extend beyond the closing table. Many agents continue to offer advice on home improvements, market trends, and when might be a good time to buy or sell again.
9. RISK MITIGATION
Real estate mistakes can be costly when they happen, whether it’s missing a disclosure, not understanding a contingency in a contract, or encountering other issues. An experienced Agent’s job is to help mitigate such risks.
10. CONTINUAL LEARNING
Agents invest in ongoing education and training to stay updated on the latest contracts and housing regulations, ensuring they provide the best possible service to their clients.
Navigating Steps to Success
Each home buying journey is unique, just like our clients. The following is a list of some of the items your Agent can assist you with during the purchasing process.
PROVIDING FINANCIAL GUIDANCE
Financing and good lender relationships are important. We can recommend a variety of loan officers who can help you financially prepare to purchase your home. Your Agent can:
◊ Provide a list of lenders who can pre-qualify you and confirm the property price range
◊ Suggest that you obtain loan pre-approval subject to the property selection
◊ Collaborate with the lender on a bridge loan, if relevant, so you can buy before you sell
◊ Provide any requested documentation
◊ Show the property to the Appraiser and provide supporting comps
Viewing & Evaluating Properties
LOCATING & VIEWING PROPERTIES
Our Agents view properties every day, follow local market dynamics, and are here to guide you in finding the right home. Your Agent can do the following:
◊ Set up automated listing alerts
◊ Present off-market or pre-market listings as they arise
◊ Schedule and set up private showings
◊ Map out and tour properties with you
◊ Recommend open house properties to tour
◊ Provide monthly market reports / updates
◊ Review the pros and cons of each home after viewing
EVALUATING PROPERTIES
We can help you assess how your selected property compares to active and recently sold comps.
◊ Your Agent will request the Disclosure Package, Preliminary Title Report, and other information from the Listing Agent.
◊ You should discuss with your Agent if you want to get any additional inspections or reports, and work together to determine the necessary time frames for contingencies.
◊ If the home is in an HOA development and the Listing Agent has not provided the HOA documents, the Agent can request and review those documents.
◊ Your Agent can recommend a title and escrow company.
A Winning Offer
When we locate a property that meets your needs, we can assist you in determining an offer price and terms, and negotiate on your behalf to help you win the sale.
◊ Communicate with the Listing Agent to get the best information possible about competing offers, sellers’ preferences regarding terms, and the timeline for offer submission.
◊ Review comparable sales, discuss the price and terms, and prepare a compelling offer.
PRESENTING YOUR OFFER
What may not be evident at the outset is that having an experienced Agent with a good reputation in the eyes of other Agents can often be a key factor in assessing competing offers.
◊ Present the offer in person or by email in a timely manner
◊ Negotiate on your behalf, review counteroffers, and write any addenda needed
OPENING ESCROW
Congratulations! This is just the start of the transaction process.
◊ Open escrow at the selected title company
◊ Review wire-fraud concerns and ensure that you understand how to communicate directly with your trusted escrow officer
◊ Maintain a secure transaction file with all required documents
Understanding Contingencies
There may be numerous contingencies, and your Agent will help you navigate them. If you have an inspection contingency, this will allow you to order further inspections and reports to get more information about the property.
Your Agent can recommend or help you locate inspectors for all the inspections you want to undertake, and can also:
◊ Call inspectors to check their schedules and set up inspection appointment times
◊ Complete an Agent Visual Inspection
◊ Review inspection reports with you
◊ Communicate with your lender as requested
◊ Assist the Appraiser with home access and provide comps
◊ Provide resources for homeowners insurance and options – this is a critical step given the current insurance climate
◊ Assist you in making a Request for Repair, if applicable
◊ Remove or address any remaining contingencies
The Closing Table
Congratulations on purchasing your new home! Here are few things your Agent will do right before closing:
◊ Recommend movers, designers, and landscapers as needed
◊ Arrange for a final walkthrough of the property
◊ Provide resources for a home warranty policy
◊ Accompany you to the closing
◊ Provide keys
“Home buying is not just about investing in property, but investing in dreams.”
